Colombia's Peso Trading Freely

Colombia received pledges for credits totaling $6.9 billion from international lending agencies, an announcement that helped buffer the peso in its first day of trading freely.

The International Monetary Fund unveiled $2.7 billion in credits while the Inter-American Development Bank promised $1.7 billion. The World Bank offered $1.4 billion, the Andean Development Corp. $600 million and the Latin American Reserve Fund $500 million over three years.

Colombia, in its worst recession in six decades, is expecting its economy to contract by 3.5 percent this year. It needs the credits to help close a budget shortfall, restore confidence and boost a currency that has declined 29 percent this year against the dollar.

"Financing of this magnitude will make it much easier for Colombia to tap the bond market, as we plan to do early next year" Juan Camilo Restrepo, Colombia's finance minister said. He didn't say how large a bond issue the country wants to sell.

Colombia expects the IMF to approve the loan and disburse the money in three equal payments, Restrepo said. The first $900 million installment could be made by the end of October, he said, denying that the IMF had demanded a change in foreign exchange policy.